Business News Round Up (04/03/2022)
UK businesses expect prices to soar in the coming year
British businesses expect inflation to rise at its fastest pace for five years, according to a Bank of England survey, as the war in Ukraine pushed up energy prices to their highest level in decade. Chief financial officers forecast inflation to rise to 4.8% this year — its highest since the Decision Makers Panel survey began in 2017. The expectation was 4.5% in the DMP’s January survey. Business groups reported that prices rose by an annual rate of 5.4% in the three months to February, twice the rate over the same period last year. The survey, conducted between February 4 and 18 across nearly 3,000 businesses, predated Russia’s attack on Ukraine, which has pushed the price of oil to its highest level since 2008. As a result, Steffan Ball, economist at Goldman Sachs, expects that the consumer energy price cap set by the UK energy authority twice a year will rise by 55% in October. This means “the peak in headline inflation shifts from April to October, rising to 9.5% in October and remaining above 7% through 2023 Q1,” Ball explained. He expects inflation to rise to 8.5% in April, up from 5.5% in January.
https://www.ft.com/content/ea05fb4d-4551-47f5-a26f-c70fef7bb0e7
Growth downgraded as consumers shun shops
Britain’s economy is expected to grow more slowly than previous forecasts as consumer spending and business investment are squeezed by inflation. The British Chambers of Commerce has downgraded its expectations for UK GDP growth in 2022 to 3.6%, down from 4.2% in its previous forecast in December 2021 and less than half the growth of 7.5% recorded last year. It now sees consumer spending growing at 4.4% in 2022, from its previous forecast of 6.9% while business investment is forecast to grow at 3.5% in 2022, down from the previous forecast of 5.1% and materially lower than the Bank of England’s latest projection of 13.75%. Suren Thiru, head of economics at the BCC, said: “Our latest forecast signals a significant deterioration in the UK’s economic outlook. The UK economy is forecast to run out of steam in the coming months as the suffocating effect of rising inflation, supply chain disruption and higher taxes weaken key drivers of UK output, including consumer spending and business investment.”
FinTech Scotland report pledges to add £2.1bn to the economy
FinTech Scotland has published the UK’s first fintech research and innovation roadmap, with plans to raise the sector’s contribution to the economy from £598m to £2.1bn in Gross Value Added (GVA). The industry body is also hoping to help create an additional 30,000 fintech-related jobs by 2031. The cross-industry collaboration resulted in four key strategic innovation themes: open finance data, climate finance, financial regulation and payments and transactions. One of the priorities include the gamification of investment decisions and budgeting, while another is preparing the insurance sector for future disruption via open finance and data. It is also seeking to improve access to funding within the UK and improve access to talent within the UK and internationally among its route map plans. The roadmap is published on the anniversary of the Treasury-commissioned Review of Fintech led by Ron Kalifa. Network International chair and former Worldpay chief executive Kalifa said: “This roadmap aligns with the recommendations I set out in the review of UK fintech and supports our national ambition to encourage growth by creating the right conditions for innovation. I believe the roadmap can act as a stimulus for purposeful UK wide fintech collaboration and I am excited to see the positive impact of this work.”
https://www.insider.co.uk/news/fintech-scotland-report-pledges-add-26383354
Mental health problems cost UK economy at least £118 billion a year – new research
Mental health problems cost the UK economy at least £117.9 billion annually according to a new report published today by Mental Health Foundation and the London School of Economics and Political Science (LSE). The cost of mental health problems is equivalent to around 5 per cent of the UK’s GDP. Almost three quarters of the cost (72%) is due to the lost productivity of people living with mental health conditions and costs incurred by unpaid informal carers who take on a great deal of responsibility in providing mental health support in our communities. Across the UK there were 10.3 million recorded instances of mental ill health over a one-year period, and the third most common cause of disability was depression. The report, ‘The economic case for investing in the prevention of mental health conditions in the UK’, makes the case for a prevention-based approach to mental health which would both improve mental wellbeing while reducing the economic costs of poor mental health. Mark Rowland, Chief Executive of Mental Health Foundation, said: “Our report reveals the monumental cost to the economy of poor mental health. It also demonstrates the opportunity to make a radical change in our approach to mental health by prioritising prevention, resulting in improved wellbeing for all and reducing costs to our economy. We urge governments across the UK to pay attention to what the evidence is telling us and commit to investing in cost-effective prevention interventions that are proven to work. Too often decision makers may ignore or dismiss evidence-based programmes and policies focused on prevention, citing prohibitive expense.”